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Salceda proposes five-point approach to sugar supply issue; House tax panel chair says world sugar prices could still rise by 58%

July 8th, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) has warned that elevated sugar prices could still rise by around 60% “similar to the recovery phase after the 2009-2009 global financial crisis,” and has proposed a five-point mitigation agenda to prevent the country from running out of sugar.

“World sugar prices went as high as 29.3 cents per pound during the recovery period post-GFC. Since oil prices have shown a momentum similar to what it did after the 2008-2009 crisis, there is little reason to believe world sugar prices will also approach the levels it did then. World prices are currently at 18.5. So, you still have upside potential of around 58% to hit those levels,” Salceda said.

Salceda adds that “you have to remember as well that sugarcane is used not only for table sugar, but also for alcohol – and we saw increased demand for alcohol during the pandemic.”

Salceda made the statements amid fears of sugar supply shortage.

Five-point plan against sugar supply shortage

In response, Salceda has proposed a “five-point plan” that the Executive branch can immediately undertake to mitigate supply woes, short of increasing imports.

“First, I propose that the National Biofuels Board set the supply of sugar biofuel additives required of petroleum products to zero, and redirect the demand to other sources such as jathropa, cassava, and others. The Biofuels Act of 2006 requires oil companies to produce a gasoline blend with at least 10 percent bioethanol, so not having to use sugarcane for that demand will already be a good start. PBBM’s proposal to have the NBB increase biofuel content can require sources other than sugar.”

“Second, let us request manufacturers of rubbing alcohol and other non-food sugarcane-based products to shift to other sources. I think in this regard, the Department of Science and Technology will be very important.”

“Third, once face-to-face classes resume, we should be stricter about restricting sugar-sweetened beverages in schools to reduce non-essential and unhealth consumption of sugar. VP Sara can immediately issue guidelines to this effect.”

“Fourth, PBBM can instruct the Sugar Regulatory Authority, the Department of Agriculture, and the local government units covering sugar districts to evaluate and optimize processes in the sugar value-chain, from harvesting to milling to refining.”

“Fifth, PBBM can validate and investigate possible hoarding of sugar by traders. Some local planters have pointed out that there should not be sugar shortages. The Philippine Competition Commission, the Department of Agriculture, and the Department of Trade and Industry can be mobilized to prioritize monitoring against pricing and supply abuses.”

Salceda however said that “at some point, I think we will have to import. That seems to me to be inevitable. But we should try our best to address the domestic supply situation as well, because, as I said, world prices are likely to pick up, consistent with usual trends post-crisis.”

Salceda says that Congress will try to meet with sugar stakeholders as soon as session resumes and committees are organized.

“The House leadership will probably deputize a team of members of Congress to look into solutions, and we will work very closely with the President’s economic managers.”

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